Here is what India's startup CXOs are demanding from the government in Budget 2018
Even as Budget 2018 is expected to be announced this week, startups and small businesses in India are asking for relaxation in compliance, reduction in GST rates and exemptions of tax on their employees. Here is what India's startup CXOs are demanding from the government in Budget 2018:
Puneet Gupta, co-founder, and COO, icanstay:
“Startups are very important part of economic growth, innovation, and worldwide competitiveness because we provide eccentric service and in doing so, we are producing great employment opportunities. A startup is all about a new idea, new concepts, and innovation said "Gupta.
“As per the government new tax slabs now, hotel rooms of Rs 7,500 and above will have to submit a luxury tax of 28 percent. It means that for a 24-hour hotel stay, one will pay minimum Rs 2,100 as GST only. We believe that 28 percent GST is high for a single night stay. It should be decreased to 12 percent,” he added.
Jose Thattil, co-founder, and CEO of Phi Commerce:
“The year of 2017 has seen a consistent growth of digital payment transaction. The government has done a laudable work by empowering citizens of the country to transact digitally by equipping them with bank accounts and payment instruments,” said Thattil.
“However, 30 lakh POS terminal and few lakh QR codes for a billion plus say a lot on the scope for building the acceptance infrastructure and the upcoming budget must take steps in this direction. One such step would be the creation of acceptance development fund. This is akin to any market development fund set up by new businesses to create awareness, build a loyal customer base. On similar lines acceptance development fund will incentivize merchants, banks, payment processor to enable digital payments to the grassroots levels and conduct mass education campaign to promote the awareness and benefits of digital payments,” he added.
Robin Raina, CEO, Chairman, and President at Ebix:
“Today, the basic electronic blocks for digital transactions to take off are in place – UPI, eKYC, and Aadhaar – and they are all talking to each other. The introduction of the Goods and Services Tax will go a long way in bringing the so-called `black economy’ into mainstream GDP. Citizens should now realize paying taxes has long-term advantages over unaccountable and untaxed wealth,” said Raina.
Gaurav Hinduja cofounder of Capital Float:
“For the Budget 2018-19, we hope that the government will continue to push digitization of financial services and encourage consumers to use digital platforms for transactions. Initiatives such Aadhaar and UPI provide a good opportunity for banks, insurers, and fintech players to expand India’s efforts towards financial inclusion. Another area of focus should be reducing the cost of capital for the MSMEs by improving lenders access to low-cost funding sources such as MUDRA and SIDBI and relaxing securitization norms,” said Hinduja.
Sanjay Sharma, MD, and CEO, Aye Finance:
"As we approach for the budget this year, one of the primary suggestions would be that the government should continue its firm stand on not allowing unnecessary loan freebies to the agro or MSME sector. Passing on such freebies destroys the credit discipline and rewards the offenders, and thus indirectly punishes the diligent loan repayers. Further, the regulatory rules governing the fintech businesses need to be finalized on priority. Last year has seen these go through discussions and consensus building. This year should see the rules formalized into policy pronouncements. The focus of the regulators should be to enlarge the reach of organized lending, especially in bringing the excluded parts of the economy into the fold of organized lensing. Fintechs are, and will, play an important part in achieving this objective," said Sharma.
Manish Chaudhari, Co-Founder, and CRO, CoinTribe:
“Given the growth in fintech, it will be a welcome move if the government also creates some schemes to encourage budding fintech entrepreneurs e.g. creation of fintech parks where space, high-speed internet, basic admin facilities can be provided," said Chaudhari.
Ranjit Punja, CEO, and Co-Founder, Creditmantri:
“As a fintech service which has data and technology in its core, the GST did not impact us directly but this unified tax with and the recent systemic changes would bring about a much-needed digital push and increased accountability. We hope in the year ahead that the Digital India initiatives along with the GST which functions entirely online would bring about a shift in mindset and increased digital adoption,” said Punja.
Satyam Kumar, Co-founder, and CEO, Loantap:
“Start-ups are doing a great service to the Nation. Besides obvious things like job creation, FDI & innovation, they are bringing consumer-centric approach to the business. This is pushing well entrenched old-world companies to look after customers as individuals with varying needs, unlike a production belt approach which they presently have towards the customers. Naturally ‘startup’ ecosystem needs soft-hand approach from government & regulators. Of course, the authorities also need to differentiate based on good and bad intentions of the startup,” said Kumar
Alok Mittal, an active angel investor, and Co-founder, Indifi Technologies:
“We hope that the budget will announce concrete measures for continued push and incentive for digital payments. Expanding the coverage of Mudraa and other credit guarantee schemes to cover new age business models and fintech platforms will help the sector to get more access to credit and digital existence. Secured API access to customer information using GST system and simplification around GST will be an additional benefit,” said Mittal.
Yashish Dahiya, Co-Founder, and CEO, Policybazaar :
“Introduce a separate tax deduction of Rs 20,000 for Pure Life Insurance Cover Beyond Section 80C Rs 1.5 lac Deduction: In India, death of a family member can destroy that family’s future and development. We hope no one ever faces such a situation, but the truth is millions of people do, as they are highly dependent on the income of the earning member(s),” said Dahiya.
Nikhil Arora, Vice-President, and, Managing Director, GoDaddy India:
“The government’s push to sensitize and encourage MSMEs towards the adoption of new IT technologies has promoted the growth of MSMEs in recent years. The announcement and focus on digital MSME scheme and monetary support stands to benefit a large number of MSMEs coming from Tier 2 and Tier 3 cities. We anticipate that the Digital India theme is expected to continue its run in the 2018-19 budget, embarking on a new economic growth model aligned with global technological and developmental trends, providing opportunities for further growth for MSMEs to move into digital technologies,” said Arora.
Amit Munjal, founder, and CEO, Doctor Insta:
“The telemedicine or virtual healthcare market in India has witnessed significant growth, owing to its potential of providing the world-class clinical and medical services to distant and rural locations as well as to large cities where People have time constraints and telemedicine provides Instant access addressing the health needs anytime, anywhere. Though the industry has garnered the good support of both the government (SEHAT Program) and private organizations that are investing religiously in telemedicine industry, infrastructure issues still remain an impediment albeit less than earlier in unleashing the growth of this sector. Even though the market is poised for an upswing, it is still currently constrained by the slower than expected adoption and engagement of users,” said Munjal.
Meena Ganesh, MD and CEO, Portea Medical:
“Critical care equipment like a ventilator, oxygen concentrator, BIPAP, CPAP are under 12 percent GST and 7.5 percent customs duty. Since these are life-saving equipment, these should be made tax free. Mobility Assist equipment like wheel chair/walking stick/crutches is under 5-7.5 percent GST. Under VAT they were tax-free. The mobility assist equipment should be made tax free. Spare parts for all Medical Equipment is being taxed at 28 percent GST. This is too high and should be taxed at a lower rate as the original equipment,” said Ganesh.
Rekuram Varadharaj, Co-founder and COO and Krishna Ulagaratchagan, Co-founder and CEO of healthi:
“Health insurance is a big area of concern and healthcare expenses are also on the rise. We hope to see more allocations towards this end in this budget. Statistics indicate that while 85 percent people are covered by private medical insurance, about two-thirds of medical expenses are self-funded in India. About 15 percent of the population is neither covered by private nor government insurance schemes. A positive step in this direction would be to increase the exemption on medical reimbursement,” said Varadharaj and Ulagaratchagan.
Satish Kannan, CEO and Co-Founder, DocsApp:
"We require more clarity with regard to the laws governing telemedicine, online consultations, and medicine delivery. The directives are limited and do not cover the vast scope and alternatives prevalent in the digital healthcare space. We are considered an IT company which delivers healthcare, and therefore it's mandatory to pay GST. On the other hand, health care providers do not fall under the GST umbrella. It would be great to have a clear, and uniform, policy for all businesses operating in the healthcare space,” said Kannan.
Hari Menon, Co-Founder and CEO, Bigbasket:
“We are very happy the way GST has been implemented. Players like bigbasket have accrued a lot of benefits. It has brought a definite relief from a key issue faced by the e-commerce segment that of cascading taxes; ensured seamless movement of goods across the country and brought in efficiency and transparency in the manufacturing sector. The implementation of GST has helped us in effectively selling unique products of one state at same price across the nation. For most of the products, prices have come down. If the rates are lowered further, it would be great. The customers will benefit more. But beyond GST, I am not expecting any major reforms in this year’s budget from the business side,” said Menon.
“I feel that the budget should focus on the following two sectors: skill development and job creation; and infrastructure. Though there has been a lot of work going on in these sectors, a further fillip to these in the upcoming budget would be a positive step,” he added.
Ameen Khwaja, CEO and Founder, LatestOne.com:
“The e-commerce sector has been showing a growth-promise as few other industries have shown in the past few years. Its growth has not only generated employment but has also helped improve the supply chain processes in the country. However, this growth is largely limited to urban parts of the country,” said Khwaja.
“The hinterland continues to suffer power outages, poor data connectivity and road infrastructure that leaves a lot to be desired. Incidentally, these three are crucial for the success of e-commerce industry. If the government focuses on developing infrastructure in rural areas, then e-commerce industry can make a substantial contribution to bring about more inclusive growth in the nation as a whole. Also, we live in a time where mobile phones have become a very important part of our lives, our social interactions, and our safety. However, keeping the batteries charged is a challenge. Power banks, hence, have become an essential accessory. Power banks are currently listed under 28 percent slab. If it is brought under a lower slab of 18 percent, we would have taken a big step towards realizing the dream of a truly digital India,” he added.
Mitesh Shah, Head of Finance, BookMyShow:
“Given the NDA government’s strong intent to drive reforms, we definitely anticipate some rationalisation in tax structures and strengthening of related infrastructure. While the GST council has already taken some proactive measures, we hope the government will reemphasize on a roadmap for simple and business-friendly GST compliance and administration systems. More importantly, over the course of next few months, initiate all necessary constitutional amendments to ensure that there are no other state or local body taxes, as they defeat the very purpose of bringing uniformity in tax structure while ensuring proper input credit for taxes,” said Shah.
Sandipan Mitra, CEO, HungerBox:
“As we have been witnessing, India is going through a digital revolution and would continue to see through this for the coming years. Technology Hardware is a primary necessity to enable this digital revolution. The current costs and regulatory hurdles hurt startups a lot, especially during the early years. A relief on the customs duty on imports and the applicable taxes and easier regulatory measures would be a very good step in helping startups to focus more on enabling the digital economy of the country. We pay an 18 percent import duty on the IoT device, referred to as the Vendor Terminal. In addition, we pay another 18 percent GST tax on it (these are the multiple vendor terminals that are placed in the 75+ digital cafeterias we manage for clients). Import duties could be removed and taxes could ideally be in the low single digits. This will significantly boost our business. Another step to aid the digitization would be to reduce the MDRs for the merchants even for the other mode of digital payments like Credit cards, Net banking, etc,” said Sandipan Mitra, CEO, HungerBox.
“We are expecting that the income tax slabs are revised so that people have more in-hand cash as compared to the in-hand component with the current tax slabs. This would increase the disposable income of the employees and hence allow them to spend more on HungerBox platform,” he added.
Dhiraj Agarwal, Cofounder, Campus Sutra:
"While ease of business ranking of India has improved in the recent index lot needs to be done in reducing the procedural delays. Procedural delays, especially in import, can be detrimental to early start-ups. Recently we had an incident where a sample set was stuck in customs for close to 21 days. This delay had a huge impact on our SS18 season launch. The launch was delayed by almost 2 weeks due to this. The government needs to take steps in easing importing of goods,” said Agarwal.
Sudeep Singh, Co-founder, and Chief Evangelist, GoWork:
“The Indian co-working industry has seen a phenomenal growth in the year 2017. Co-working has become a thriving ground for start-ups and is encouraging their growth within its ecosystem. To make this growth upbeat and continuous, we look forward to furthering developments in government’s smart cities initiative, as occupiers are looking for improvement in infrastructure in these cities to be able to make a move towards Tier II and Tier III cities. Also, keeping in mind that startups do not make a profit in their primary years, the government can rather lower the income tax slabs for startup employees which will aid startups to reduce costs. This year, we look ahead to some important tax exemptions that would give an enhancement to all existing and upcoming startups," said Singh.
Sandeep Sabharwal, CEO, SLCM Group:
“India has improved its ranking in global index for ease of doing business as the government continues to work on providing enabling environment. However, one area where the government can do more in Budget-2018 is the agriculture and the allied sectors. The government can take a cue from last Economic Survey that has put an ambitious target of 4% growth rate for the sector that accounts for 40-45% of India’s workforce. However, for achieving this, the government needs to lend helping hand to the agriculture financing arms and warehousing service providers, by rationalizing the tax burden on them. It will not only help achieve growth targets and food security but it may also attract investment and newer technology in the sector," said Sabharwal.
Jayanth Sharma, Co-founder and CEO, Toehold:“Tourism is a particularly beneficial industry for a country, as it brings revenue to the exchequer by allowing people to experience its beauty and culture. It provides an incentive for people to preserve their heritage, both historical and ecological, and finds ways to bring joy and happiness to many. India's tourism industry is at an inflection point, with the amount of domestic and international tourists spending in India on the rise. Investment in tourism from Budget 2018, especially in building much-needed infrastructure, would be a welcome shot in the arm for Indian tourism. While India’s brand as a tourist destination has become more globally prominent than ever before, investing in tourism-centric infrastructure could help make our country’s beauty more accessible to its citizens and international tourists. Countries like Kenya have created a wonderful travel-friendly ecosystem, and the focus and prominence it receives as an industry could be a guide to Indian authorities, " said Sharma.
India Union Budget 2018: What does Finance Minister Arun Jaitley have up his sleeve? Click here for live Budget 2018 news, views and analyses.